The Trulia Price Monitor and the Trulia Rent Monitor are the earliest leading indicators of how asking prices and rents are trending nationally and locally. They adjust for the changing mix of listed homes and therefore show what’s really happening to asking prices and rents. Because asking prices lead sales prices by approximately two or more months, the Monitors reveal trends before other price indexes do. With that, here’s the scoop on where prices and rents are headed.
Prices Up 8.3% Year-over-Year, Rising in 95 of 100 Largest Metros
In April, asking home prices rose 1.3% month-over-month, seasonally adjusted. Quarter-over-quarter, prices are up 4.3%, seasonally adjusted. Year-over-year, prices are up 8.3% nationally and are higher than one year ago in 95 of the 100 largest metros.
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April 2013 Trulia Price Monitor Summary |
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|
% change in asking prices |
# of 100 largest metros with asking-price increases |
% change in asking prices, excluding foreclosures |
|
| Month-over-month,
seasonally adjusted |
1.3% |
Not reported |
1.7% |
| Quarter-over-quarter,
seasonally adjusted |
4.3% |
96 |
4.6% |
| Year-over-year |
8.3% |
95 |
9.3% |
Strong Job Gains Behind Sharp Home Price Increases
To understand why home prices are rising, let’s look at where they’re rising most. The 10 metros with the biggest Y-o-Y price gains include Las Vegas and Phoenix in the Southwest, seven metros from across California, and just one outside the West – Warren–Troy–Farmington Hills, MI, next to Detroit. Most of these 10 markets had a severe housing crash after the bubble, creating bargains for investors and others to buy, and then rent out or hold. As we reported last month, investor activity has added to the rental supply resulting in single-family home rents flattening year-over-year.
But investors aren’t the whole story – not even close. Markets with big price leaps have something else in common: nine of these top 10 price gainers also have above-average job growth in the past year. National job growth was 1.5% Y-o-Y in March 2013 based on the latest available month for metro-level jobs data from the Bureau of Labor Statistics (BLS); only Warren–Troy–Farmington Hills, MI– at 0.3% job growth – fell below that national average.
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Top 10 Metros for Asking Home Price Gains |
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| # | U.S. Metro |
Y-o-Y% change in prices |
Y-o-Y% change in jobs |
| 1 | Las Vegas, NV |
28.5% |
2.0% |
| 2 | Oakland, CA |
26.3% |
2.2% |
| 3 | Sacramento, CA |
25.6% |
1.7% |
| 4 | Phoenix, AZ |
23.3% |
2.3% |
| 5 | San Jose, CA |
22.9% |
3.2% |
| 6 | Bakersfield, CA |
19.0% |
2.0% |
| 7 | Orange County, CA |
18.6% |
2.4% |
| 8 | San Francisco, CA |
18.1% |
3.4% |
| 9 | Riverside– |
18.1% |
2.1% |
| 10 | Warren–Troy– |
18.0% |
0.3% |
| Among 100 largest metros. Job growth through March 2013, from BLS. To view the price trends for the largest metro areas, click here. | |||
Jobs and Home Prices Across the Country
Jobs and housing demand go hand in hand. Why? Two reasons. When job growth attracts newcomers to an area, those newcomers need a roof over their heads. Plus, when people find jobs – even if they don’t move to a new city – they’ll often look for their own place to rent or buy instead of staying with roommates or parents. Census data from March 2013 show that just 12% of 25-34 year-olds with jobs live with their parents, versus 20% of 25-34 year-olds without jobs who live with their parents.
The correlation between job growth and home price growth is 0.4 and is statistically significant. In fact, looking across the 100 largest metros, only Warren–Troy–Farmington Hills, MI, and neighboring Detroit have sharp price growth WITHOUT strong job growth: they sit pretty much alone in the lower-right part of the scatterplot graph pasted below. However, strong job growth doesn’t necessarily mean hyper growth in home prices.
Four Texas metros – Austin, Houston, Fort Worth, and Dallas – have some of the fastest job growth in country but with price growth near today’s national average, ranging from 7-10% Y-o-Y (see toward the top left of the scatterplot). Why doesn’t Texas have the same price growth as California despite having similar job growth? Because Texas didn’t suffer the housing bust as California and the rest of the Sunbelt did, so there’s less investor activity and price yo-yoing in Texas than in harder-hit markets.
Rents Fall in San Francisco and Las Vegas, Despite Soaring Prices
Rents are up 2.4% year-over-year nationally, rising faster than prices in just three of the 25 largest rental markets: Houston, Chicago, and Philadelphia. Furthermore, rent growth has slowed: in 19 of the 25 largest rental markets, rent growth year-over-year was slower in April than three months earlier, in January. In some markets, rents and prices are moving in the opposite direction, or nearly so: the four metros with the slowest rent growth, or even declines – Seattle, Sacramento, Las Vegas, and San Francisco – all had price gains of more than 15% Y-o-Y.
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Rent and Price Changes in the Largest Rental Markets |
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| # | U.S. Metro |
Y-o-Y% change in rents |
Y-o-Y% change in prices |
| 1 | Houston, TX |
9.7% |
7.6% |
| 2 | Boston, MA |
6.3% |
7.6% |
| 3 | Miami, FL |
6.3% |
13.8% |
| 4 | Chicago, IL |
5.6% |
3.3% |
| 5 | Portland, OR-WA |
5.1% |
14.7% |
| 6 | Tampa–St. Petersburg, FL |
4.7% |
8.8% |
| 7 | Denver, CO |
4.3% |
12.1% |
| 8 | Philadelphia, PA |
4.1% |
-1.3% |
| 9 | San Diego, CA |
4.1% |
14.6% |
| 10 | New York, NY-NJ |
3.4% |
4.2% |
| 11 | Orange County, CA |
3.2% |
18.6% |
| 12 | Dallas, TX |
3.2% |
8.1% |
| 13 | Minneapolis–
St. Paul, MN-WI |
2.4% |
11.8% |
| 14 | Oakland, CA |
2.1% |
26.3% |
| 15 | Atlanta, GA |
2.0% |
11.7% |
| 16 | Washington, DC-VA-MD-WV |
1.7% |
8.0% |
| 17 | Los Angeles, CA |
1.6% |
13.7% |
| 18 | Phoenix, AZ |
1.4% |
23.3% |
| 19 | Riverside– |
1.1% |
18.1% |
| 20 | Baltimore, MD |
1.0% |
2.7% |
| 21 | St. Louis, MO-IL |
0.6% |
4.0% |
| 22 | Seattle, WA |
0.4% |
15.5% |
| 23 | Sacramento, CA |
0.4% |
25.6% |
| 24 | Las Vegas, NV |
-1.4% |
28.5% |
| 25 | San Francisco, CA |
-3.4% |
18.1% |
| Among 25 largest rental markets. To view the rent trends for the largest metro areas, click here. | |||
The next Trulia Price Monitor and Trulia Rent Monitor will be released on Thursday, June 6, at 10 AM ET.
How did we put this report together? To recap the methodology, the Trulia Price Monitor and the Trulia Rent Monitor track asking home prices and rents on a monthly basis, adjusting for the changing composition of listed homes, including foreclosures provided by RealtyTrac. The Trulia Price Monitor also accounts for the regular seasonal fluctuations in asking prices in order to reveal the underlying trend in prices. The Monitors can detect price movements at least three months before the major sales-price indexes do. Our FAQs provide all the technical details.
